PGS ASA: Agreement in Principle with Lenders on Main Terms

PGS ASA (the “Company” or “PGS”) has reached an important milestone in the previously reported discussions with its lenders. The Company has come to an agreement in principle on main terms with the negotiation teams of the finance parties under its ~$300 million export credit facilities (“ECF”), and a majority of the lenders under its $350 million revolving credit facility (“RCF”) and ~$520 million term loan B facility (“TLB”).

The agreement in principle remains subject to lenders’ internal approvals and agreement on final documentation.  Subject to the successful completion of these processes in the next few weeks, it is anticipated that the Company will initiate an amendment request to all TLB lenders not yet engaged in the negotiations to approve and implement final agreements.  To date, the Company has reached agreement in principle on main terms with; an Ad Hoc Group of TLB lenders representing 62% of its ~$520 million TLB facility; lenders representing 81% of its $350 million RCF; and all of the ECF financing parties. The Board of directors of PGS has approved the transaction conditional only upon the lenders’ internal approvals and agreement on final documentation.

The main terms agreed include:

• No debt maturities and no scheduled debt amortization until September 2022 which will be the new maturity of an amount of $135 million equivalent to the RCF amount maturing today
• The $215 million RCF due 2023 will be combined on equivalent terms with the TLB due 2024, with the combined TLB having a $200 million amortization in September 2023 in lieu of the current 2023 RCF maturity
• An excess liquidity sweep that will apply for any liquidity reserve in excess of $200 million at any quarter-end
• An amendment of the financial maintenance covenants, with the net leverage ratio at 4.5x through 30 June 2021 and a gradual step down thereafter
• Customary fees to be paid partly in cash and partly in kind
• The issuance of a NOK 116.2M 3-year 5% unsecured convertible bond (“CB””) which can be converted into new shares at NOK 3 per share up to a maximum of 38,720,699 shares (equalling 10% of the currently outstanding PGS shares).  Lenders under the RCF and TLB facilities will have a pro rata preferential right to subscribe for the CB against conversion of a corresponding amount of existing loans. To the extent the CB is not fully subscribed, a subset of the lenders under the TLB will subscribe for the unallocated amount for cash.  PGS will be able to require that bondholders convert the CB into shares if the PGS share price exceeds NOK 6 during 30 consecutive trading days

The majority of lenders under the $135 million tranche of the Company’s RCF, which is due later today, have agreed to the main terms.  As part of the agreement with the majority of the lenders under the Company’s RCF and TLB, the Company will not repay any part of the $135 million due today. The non-payment of principal of such facility today is an event of default under the RCF and TLB.  A required majority of lenders under the RCF and TLB facilities have entered into a forbearance agreement undertaking not to take any enforcement action in connection with this on-going default.  The Company is in dialogue with the ECF financing parties to obtain the same forbearance prior to any cross-default arising under the ECF agreement.

The Company will continue working to achieve support from the required lenders under the RCF and TLB. However, if such support is not ultimately achieved, the Company has agreed with the supporting lenders under the RCF and TLB to seek implementation by use of available alternative legal restructuring procedures.

The Company will continue to operate its business as usual by performing other obligations, including payment of interest, as they fall due.

The Company will provide updates as further milestones are reached.

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PGS ASA and its subsidiaries (“PGS” or “the Company”) is an integrated marine geophysical company, providing advanced subsurface images, plus 2D and 3D data, that energy companies use to find and produce oil and gas. PGS MultiClient data library is among the largest in the seismic industry, with modern 3D coverage in all significant offshore hydrocarbon provinces worldwide. The Company operates on a worldwide basis with headquarters in Oslo, Norway and the PGS share is listed on the Oslo stock exchange (OSE: PGS). For more information on PGS visit www.pgs.com.